According to the Congressional Budget Office (CBO) on 6 Sept., the current estimate for private insurance payouts due to Hurricane Katrina is more than $30 billion dollars. This is not counting federal flood insurance and federal crop insurance, both of which will probably exceed currently allocated funding. Private insurance paid $32.5 billion after 9/11. Hurricane Andrew of 1992 cost about $35 billion in insurance. The Northridge earthquake of Los Angeles in 1994 that prompted catastrophe bonds cost somewhere between $15 and $20 billion.
The CBO somewhat optimstically estimates a near-term slowdown in GDP growth followed by a surge next year as reconstruction gets in gear. Meanwhile, the Associated Press (AP) estimates $62 billion spent by the federal government so far, projects $200 billion in the next few weeks, and estimates as much as $300 billion in the end. AP points out that that latter number is about the amount spent by the U.S. in the last four years in Afghanistan and Iraq. The AP quotes Vice President Dick Cheney as saying he couldn't put a price on it. Katrina May Cost U.S. as Much as Two Wars By DONNA CASSATA, Associated Press Writer Sun Sep 11, 6:18 AM ET
When Cheney visited Austin on 10 Sept. he provided mayor Will Wynn with a signed note saying the feds would pay Austin back for expenses thus far at the convention center and elsewhere. Apparently neither Austin nor other Texas cities nor Texas have been reimbursed for any of their aid expenses to date. One wonders how much of all that is included in the CBO's or the AP's estimates.
Maybe governments need to start issuing catastrophe bonds.
-jsq
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